The rally in the oil market came to a halt Friday after new data showed U.S. oil producers increased the number of rigs drilling for oil--by one--raising worries that the hoped-for decline in output may not come to pass.

Oil-field services company Baker Hughes Inc. said Friday that the count of drilling rigs in the U.S. rose by 1, ending three straight months of weekly declines. Since their depths last month, oil prices have rallied...